Want VS Need

Do you want it or do you need it?

This is the first question that everyone shopping everywhere should be asking themselves each and every time they go to take that hard earned cash from their pocket.

Want vs Need is a bit of a grey area though. All things in moderation and spending money on having fun is one of them.

A perfect example requires a bit of personal storytelling. This past month I spend 350.00 on a leather jacket. It was not a whim, it was a well planned purchase been in the works for about 4 years since that is when my last one bit the dust.
I waited for the perfect jacket, then I thought about it for a good long time , finally when I saw it on sale I pounced with my mastercard. I was not in great “need” of this particular item but I was in “need” of it on a sort of personal level.

The same principle applies when going away for a well deserved weekend, you need that at times.

The “ wants” that you ignore are the impulse buys. If you have 17 pairs of shoes ( guilty) you likely do not need to purchase more black pumps because they are on sale.

There are true needs, food, shelter, things to keep you healthy. There are alot of perceived needs too like for example a gym membership. You can workout at home.

A 5.00 coffee, however this may be called for when on vacation, if you are just in your work week, save that 5.00 each day for a few weeks and buy a coffee maker.

Needs will vary based on the person and their particular circumstance, I believe people do Need some things more than others. I need to be able to buy a bottle of wine once a week to share with the boy, that is part of my relaxing life and keeps the rest of my life sane.

Short post, point made, think before you buy, all things in moderation.

Cheers,

Whiskey G

Credit 101. Ignore the Siren Song

Interest is not a foregone conclusion.

Credit cards are everywhere all the time. Everyone has one, every company is trying to give you a new one.

Our world has arranged itself so that if you want to listen to music, rent movies, staying a hotel or use a parking space on a travel ferry you need to have a credit card.

They seduce you with promise of cash back, low interest rates or the ability to use travel miles to fly to the hotel you just booked with your super duper magic visa.

The thing is they can be super and magical but only when they are used perfectly with perfect discipline. Credit cards can be an amazing tool and very financially rewarding. But if you lack that perfect discipline there is a little thing that happens 21 days after purchase called interest, In Canada most of the time that means about 19.99%.

Suddenly your 15.00 ferry ride just cost 17.85. To put that in larger terms, the 1000.00 Laptop you just had to have ( even though the old one still works ) just cost you 1010.93 and will continue to charge you that 10.93 each month until it is paid back. In a year 1 ferry and 1 computer cost 1393.00because credit cards charge interest plus 10.00 per month as minimum payment. Just in case you were checking my math.

What could you have done with an extra 400.00 in our pocket?

The solution is easy but takes a little self control. Simplicity 1,2,3, applies here. If it is not in your wallet, do not spend it.

For Consumer use of credit you need to be able to go home after your day and pay back what yu used to earn your points or cash back, it will make you think as well as plan how you use your cards. it will also force you to stay within the 50/50 rule as you are not spending what is not in your budget.

Try it for 30 days, forget what your balance is now, work with what you have and see how it goes to pay for each purchase that goes on credit right away? Is it harder, do you think more before you bring out the card?

Send me your feedback in the comments and let me know how you are doing.

Cheers and happy responsible swiping!

The 1,2,3 of Simplicity

The 1,2,3 of Simplicity.

I do no not claim to be rich or out of debt. I just know what I see on a daily basis and what I have learned in my own life of being a single mom on a tight income.
At one point in time I was working in the finance world by day and then going to McDonalds by night just to make ends meet.
Thankfully now after alot of hard work I can make ends meet with only one job. I am no longer a single mom, but for all the intents and purposes of the financial end of life I am still on my own as I do not co-domicile with my partner.

I see simplicity as being a three step process.

Step 1: Simplify your finance. Use Cash.
Have one account that your automatic payments come out of , know what they are and when they come out. Most payments will accept it a few days late but they have tiny “ late payment fees” they do not always tell you about so the billing date is important.

Be sure to have the funds in the account, Going into an overdraft is just as bad as using a credit card, it is still credit just a different kind. Set up an auto payment if you have anything you still get a paper bill for, you will save trees as well which is said to be good for brownie points with the tree people.

Step 2 : Real numbers.

Assign physical numbers to variable expense. Let’s face it, tracking your money is dull. There is no flashy app for your smart phone that will make it fun.
Figure out a reasonable number for gas, food, and medicines if you get a monthly prescription. You should also budget in to this step your savings. Everything over and above these expenses are flexible and negotiable.

Take your variable expense money ( gas, food, medicines ) out in cash and put it somewhere that you can get at it easily and at no cost. I am a big fan of Mason jars hidden in the freezer and if you really want to be thrifty you can recycle pickle jars for the purpose.

Step 3 : The 50/50 rule.

This is key. You still need to have a life. I don’t care what you currently owe on your credit cards, your home or to Uncle Bob. You still need to have a life. No one is going to be motivated to keep working 9-5 or 9-9 if you never see or enjoy a dollar you earn. It sounds good in theory to work your tail off and get out of debt fast but I assure you, it is not worth it. I have done it.

The 50/50 rule is easy. 40% (and no more) should be fixed expenses like car payments, credit cards, utilities and mortgage payments.

10% of your monthly income is savings. Be diligent and pretend you never received it because you truly do not want to eat catfood when you retire and no one can work forever. You can make it grow, work for you and allow you to have some fun. . We can talk more about how to do that later. For now just remember 10% SAVE IT.

The other 50% is variable expense and of course living! Movies, food, friends, and weekends away all need to still be a part of your life, they just take a little planning.

Example, painless math I promise.

Income = 4000/ month so 1600 for fixed expense
400 to save
1600 to eat and play with

You can figure out how your own break down of those expenses works and you may have to cut in a few places to fit the formula but I promise if you use the 50/50 Rule you will avoid dipping into the credit cards while slowing paying down the balances you already have and building your savings.

Happy 50/50!

- Whiskey G

The way we were.

Once Upon a time there was such a thing called self control. People worked for less money , lived in smaller homes, paid their bills ( on time) and always had enough in their pocket to take a trip, go for dinner or buy a nice bottle of bubbly for a special occasion.
Fast forward to 2015. People make more money, live in huge homs, drive expensive cars and never have enough money to make it to their next big pay check at the end of 2 weeks.

We used to grow our food, we now pay 3.00 for a cucumber. We used to save money for our homes and cars, now we use credit.
It is a message that you hear almost daily. Pay down debt, no more interest, grow your savings.
Is it possible we are just making it too complicated?

Much like the world of fitness and weightloss, we are inundated with promises of the quick financial fix, and encouraged to buy " discount" or " on sale" frivolities. It is not far from teasing a food addict with a diet chocolate bar. It has a different make up but is still as bad for you in all different ways. What if we could adopt more simple ways on small scales that actually work in the real world?

In the world of consumerism, bank fees, interest rates, 5.00 cups of coffee and gas that must be made of gold. 100.00 hair cuts, 70.00 shoes , and do not forget the price of food.
I propose it can be different. I mean to learn how.

Hope you will ready along and comment along the way.

Thanks for the read

- Whiskey G